Factory Disasters: What Cambodia Can Teach Bangladesh

May 20, 2013 • 4:43 pm

Photo by Brendan Brady

Phnom Penh, Cambodia — As the final death toll of the Bangladesh factory collapse reached 1,126 last week, a small section of the second floor of a shoe factory in Cambodia gave way. Two people died, but witnesses said it was a stroke of luck that the number wasn’t much higher. Then, on Monday, 10 more workers in Cambodia, including a pregnant woman, were injured when an outdoor platform where workers took breaks toppled over. The incidents linked two low-income countries whose export-driven garment and footwear industries supplying major international brands were already being discussed together — but as opposites.

In Bangladesh, before the Rana Plaza disaster, there had been a string of garment-factory fires since last November that claimed nearly 400 lives. But such calamities have been nearly nonexistent in Cambodia, whose garment industry has long been watched over by an International Labor Organization (ILO) program called Better Factories. Since the monitoring program debuted in Cambodia in 2001, various versions of it have been implemented across the globe, and at the end of last year there were talks regarding its introduction into Bangladesh. That proposal has now taken on a sense of urgency. There are questions, however, about the extent to which Better Factories has been a model program and the form it should take if adopted by Bangladesh to improve the country’s woefully unsafe factories.

When it launched, Better Factories was novel for both Cambodia and its international partners. The ILO had never before taken such an active role in supervising a country’s industry. For Cambodia, after decades under debilitating rule and civil war, it was essentially the country’s first step towards industrialization. The program was conceived as part of a quid pro quo development strategy between the U.S. and Cambodia. ILO teams audited factory conditions, worker contracts and other key terms of labor in exchange for Cambodia to export garments tariff-free to the U.S.’s vast consumer market. The system has kept Cambodia’s export factories free of child labor and nearly free of so-called sweatshop conditions. The program was itself soon exported to other garment sectors around the world, from Haiti to Indonesia.

But in 2005, Cambodia’s preferential trade agreement with the U.S. expired. Originally, ILO inspection reports were sent to U.S. government officials and those that broke the rules were identified. No more. Since 2005, the reports are sent confidentially to clothing companies and their Cambodian manufacturers, and not all subscribe to the program. No longer the gatekeeper to special deals with the U.S. market, Better Factories lost an independent audience for it to name (and shame) offenders.

In the years since this change, argue some observers, garment factories in Cambodia have benefited from the presumption of best practices, even though the reality is more complex. A recent report co-published by the International Human Rights and Conflict Resolution Clinic, part of Stanford Law School, and the Workers Rights Consortium, a labor-rights monitoring group, notes that manufacturers have reduced the length of worker contracts, workplace-condition infractions have gone unpunished, and the minimum wage has decreased in real terms over the past decade. A 2010 report by the Cambodian government found that nearly half of garment workers were anemic, a condition causing fatigue that’s associated with malnourishment. In 2011, Ken Loo, the head of the Garment Manufacturers Association in Cambodia, told a local English-language newspaper that the minimum wage “provides enough nutrients to survive, but it doesn’t mean you won’t feel hungry.”

In the early 2000s, most garment workers in Cambodia were hired as regular employees, which entitled them to promotion requirements as well as protections from arbitrary layoff and other violations of the Cambodian labor code. Today, says David Welsh, the Cambodian representative of the American Center for International Labor Solidarity, an advocacy group, more than 80% of garment workers are employed through short-term contracts, usually lasting less than a year, which allow factories “to fire workers at the drop of a hat” by not renewing their contract.

Jill Tucker, the head of Better Factories, agrees that the program has lost valuable leverage, but says it has been unjustly blamed for all of the industry’s troubles. Wages, for one, are not part of the program’s remit. She also points to the summarized versions of its reports (in which factory names are withheld) that are made public: the one released last month warns that there was “a worrying increase in fire safety violations,” that 88% of factories were violating limits on overtime, and that 55% of factories weren’t providing safe drinking water. “We are putting this information out there, but we don’t control what is done with it,” she says.

Furthermore, many companies that source from Cambodia don’t subscribe to the compliance program — the shoe factory that partially collapsed last weak did not. “With the 5-10% of factories that have very poor legal compliance, we don’t have relations with their buyers so we can’t get them to change.” Tucker says she and her colleagues plan to regain some of the clout the program has lost, by disclosing the names of factories that are flagrant offenders. “If that transparency gets us kicked out of the country, that’s a risk we’re now willing to take.”

The lesson for Bangladesh, Tucker says, is that unabashed compliance violators must be named and shamed. But factories and their buyers may resist. Ken Loo, the Manufacturers Association head, contends naming noncompliant factories was “absolutely not” a constructive step. Such factories tend to serve companies that are obstinately aloof to reputational risk, he says. And, he insists that while brands may proclaim sensitivity to workplace conditions, cost remains far and way their primary concern, and ignoring this reality risks losing investment in Cambodian manufacturing.

Weak local governance, exploitative factories and retailers, and bargain-hunting consumers all share some responsibility for the burdensome conditions placed on garment workers, says John Ciorciari, a professor at University Michigan’s Public Policy School who served as an international analyst in the U.S. Treasury Department from 2004 to ’07 and has worked as a legal adviser to groups in Cambodia over the past decade. “But when you get to the question of who, realistically, I would trust to be most effective … to make positive change,” he says, the greater influence of Better Factories prior to 2005 suggests that the governments of valuable markets are the linchpin because of their commanding heights to influence all actors involved.

As policymakers debate ideal oversight models, one thing should be a settled matter, says Stephan Sonnenberg, a lecturer at Stanford Law School who oversaw its report on compliance monitoring in Cambodia: “Waiting for tragedies is a blunt and clumsy way of holding brands accountable.”